Iowa, Illinois, and Tennessee. Heritage Options Health Savings Account HSA

Transcription

1 Iowa, Illinois, and Tennessee Heritage Options Health Savings Account HSA

2 The Heritage Options HSA (Health Savings Account) can give you a new, flexible approach to health care. By choosing a qualified high-deductible health plan (HDHP) with Heritage Options HSA, you not only get all the advantages of a UnitedHealthcare benefit plan, but you can put more health care purchasing decisions in the hands of your employees, giving them more engagement in decision making. This control may have a positive impact on your premiums.

3 What is a Health Savings Account? A Health Savings Account (HSA) is a tax-free account combined with a qualified high-deductible health plan (HDHP) that has a minimum annual deductible 1 of $1,050 for individual and $2,100 for family coverage. Both you and your employees can contribute to the account. HSAs are similar to Health Reimbursement Arrangements (HRAs) in that the employer buys a high-deductible health plan and combines it with an account to help employees meet their deductible. Unlike HRAs (which are completely funded by the employer), HSAs can be funded by an employer and/or employee, can follow the employee as he or she changes jobs (called portability ), and can grow in an interest-bearing account. An employee can withdraw the money tax-free for qualified medical expenses. For expenses to be reimbursed without penalty to the employee, the claim must meet the definition of qualified medical expenses under the Internal Revenue Code. The flexibility of Heritage Options HSA Reduce your health care premiums By choosing a high-deductible health plan with an HSA, you may lower your premiums. These savings may be used to help fund your employees HSAs. Choose who pays into the account You have the flexibility of choosing whether to contribute to the HSA. You and/or your employees can contribute to the account. Encourage employees to save for health care in retirement Since unused funds in an HSA can earn interest and roll over from year to year, this feature makes it easier for your employees to save money for health care costs in retirement. The ability to save for retirement can reduce the burden on you to provide this benefit. Choose the amounts The plan design you offer will determine the maximum amount to be paid into the account. (The maximum combined contribution per year is equal to your deductible or the maximum contribution amount of $2,700 for an individual and $5,450 for a family, 2 whichever is less.) Enjoy tax benefits The HSA funds are not taxable to you and can be excluded from an employee s gross income. To understand more about the tax implications, consult with your tax advisor or attorney. Encourage wise health care choices You can help encourage employees to spend their health care dollars more wisely. By having more financial responsibility and awareness of medical costs, employees may be more prudent in their spending choices, and this may help control future premiums. 3 1 Deductible amounts are indexed by the federal government for inflation. 2 These are 2006 limits. Amounts are indexed by the federal government each year for infl ation.

4 When employees need to pay for qualified medical expenses, they have options: Covered medical and pharmacy services Employees can simply use their Exante Health Savings Account Mastercard debit card to cover their financial responsibility for medical and pharmacy services, whether it s a deductible, copayment, or coinsurance. Expenses will be taken from their account balance. For preventive visit copayments and covered pharmacy costs subject to the deductible, the debit card can be used at the time of service. For other medical services, the claim will be submitted to UnitedHealthcare. After the employee receives an Explanation of Benefits, he or she can contact the physician or health care professional to pay the claim from his or her account balance. If an employee has met the deductible and has funds left in the HSA, he or she can use the debit card to pay pharmacy copayments or other coinsurance. 4 Non-covered medical services Employees can also use the debit card to pay for any qualified medical expenses, including those not covered under their health plan. You can find a list of qualified medical expenses at Reimbursement Instead of using the debit card, employees can pay out-of-pocket (e.g., by cash, check, or credit card) and submit an Exante claim form to be reimbursed from their HSA. This form is available on Out-of-pocket Employees can pay out-of-pocket and simply let their HSA grow over time. The interest-bearing account can build up funds tax-free.

5 Built on a solid foundation By choosing Heritage Options HSA, your employees can take comfort in knowing they will be served by a strong health benefits organization that works closely with a strong financial institution. The UnitedHealthcare family of companies offers a wide range of competitive health benefit products and services in selected areas of Illinois, Iowa, Tennessee, and Virginia. Exante Bank 3 is a market leader in the HSA arena, with over 200,000 HSA accounts on the books. It was chartered in 2002 to serve the health care market and is the custodian and administrator of many products offered by Exante Financial Services. The goal of Exante Bank is to enhance the health and well-being industry by integrating the proven platforms of the financial services sector bringing innovation, reliability, and security to benefits delivery, health care administration, and transactions. For more information visit How does Heritage Options HSA work? By choosing Heritage Options HSA, your employees health plan will work like a traditional deductible plan, with coinsurance and out-of-pocket maximum requirements. An entire family deductible must be met before any family member will have services paid for by the plan. Under the qualified HDHP, there are minimum deductible requirements, and the annual out-of-pocket expenses in the plan cannot exceed $5,250 for an individual and $10,500 for a family (amounts indexed each year for inflation). 5 That means that once your employees meet their deductible with or without the help of their HSA they must pay applicable coinsurance amounts (set by your plan) up to their annual outof-pocket maximum. After reaching the maximum, the health plan covers applicable services at 100 percent. Under the Heritage Options HSA, all medical and pharmacy costs (excluding dental, vision, and preventive care services) are subject to the deductible. So, preventive care services are covered according to your specific benefit plan. Such preventive care includes, but is not limited to: Physicals and well visits Periodic health tests Prenatal care and well-child immunizations Selected screening services for numerous conditions, including heart disease and many cancers 3 Your employees also have the option of choosing another qualified trustee to administer their HSA.

6 Example of the Heritage Options HSA process Alex chooses to contribute $1,500 in 2006 on a pre-tax basis from his paychecks into an HSA. His employer contributes $500, for a total of $2,000 in the account (which is equal to the annual deductible). The first time Alex uses the HSA debit card, he picks up an allergy medication and pays the full amount ($150) with his debit card. The claim would be sent to UnitedHealthcare as any other claim, and the amount would be applied to his annual deductible balance: $2,000 Employee contributes $1,500 Employer contributes $500 During the same year, Alex has in-network health care expenses of $860 (including the allergy medicine) that are not considered preventive care. Because his deductible is $2,000, he is responsible for all of these costs. However, he may choose to use his HSA to pay the $860, and he can save the remaining $1,140 to roll over to next year s HSA. (Remember, some employees may opt to cover expenses out of their own pocket and allow their entire HSA to grow over time.) 2006 balance: $1,850 Allergy medicine: $150 Total expenses: $150 The monthly administration fee can be paid by the employer or employee (which may be paid directly from the HSA) and is waived if the HSA balance reaches $5,000. In this example, the employer covers the administration fee. Best of all for your employees, they can use their HSA to pay for any qualified medical expenses, including those not covered under your benefit plan. That may include services such as laser eye surgery, chiropractic or manipulative services, contact lenses, and eligible over-the-counter medications. For a complete listing of IRS-allowable medical expenses, visit balance: $1, balance: $2, remaining balance: $1,140 = 2007 total balance: $3,140 Allergy medicine: $150 Other in-network health care expenses: $710 Total expenses: $860 Employee contributes $1,500 Employer contributes $ remaining contribution: $1,140

7 Advantages of Heritage Options HSA for your employees Enjoy tax benefits With an HSA, your employees contributions, interest earnings, and eligible withdrawals are all tax-free. They can deduct the money that they contribute on their federal tax return, and as long as they use HSA funds to pay for qualified medical expenses, they won t pay taxes on the withdrawals. Unused funds can carry over Any HSA funds not used in a given year will be rolled over to the next year. That amount is added to the HSA in subsequent years. Unlike a Flexible Spending Account (FSA), there is no use or lose it provision with the HSA. Funds can be used for health care in retirement Like an IRA or 401(k), employees have the opportunity to invest in a variety of investment funds and grow their HSA over time. Accumulated funds in the HSA grow tax-free, so employees can set aside funds to pay for health care expenses in retirement. Funds are portable With an HSA, your employees own the account. If employees leave their job, the account is theirs to take wherever they go. More control over health care spending Your employees decide how much money (up to certain limits 4 ) they want to contribute each year, so they may be more careful in how they spend money for health care. Employees can decide whether to pay for health care expenses from the account or save it for future use by paying out of pocket. The HSA is more flexible than other taxadvantaged accounts, such as FSAs and HRAs. Ability to pay for non-covered expenses With an HSA, employees can use the funds to pay for any qualified medical expense, including those that may not be covered under your health benefit plan. HSA funds can also be used to pay for COBRA insurance on qualified long-term care insurance and Medicare premiums (but not Medicare supplemental plans). Easy debit card payment Your employees will have virtually no hassle with claims under an HSA. They can simply use an Exante Health Savings Account Mastercard debit card wherever they use health care services. As long as they have the necessary funds in their account, they can use the card to pay copayments or other out-of-pocket expenses. They will not need to submit claim forms for reimbursement. The HSA can also be used for out-of-network physicians and health care professionals. 7 4 Limits set by the selected deductible level and/or the IRS.

8 Insurance coverage provided by or through United HealthCare Insurance Company, UnitedHealthcare Plan of the River Valley, Inc., UnitedHealthcare Insurance Company of the River Valley, or their affi liates. Administrative services to self-funded plans provided by United HealthCare Insurance Company, United HealthCare Services LLC, or UnitedHealthcare Services Company of the River Valley, Inc. Visit us at OPT HSA EMP 07/ United HealthCare Services, Inc.